1. Maximizing Customer Retention
A Strategic Approach to Effective Churn Management

2. Companies can achieve better retention rates,
reduce acquisition costs and boost market share by
addressing the root causes of customer attrition and
applying targeted treatment strategies that involve
all service channels and functions in an end-to-end
effort to improve the customer experience.
Page 1

3. Page 2
The Challenge
Today’s customers want it all—com-petitive
pricing, value for money, and
above all, high quality service. What’s
more, they won’t hesitate to switch
providers if they don’t find what
they’re looking for. Even in industries
where satisfaction is relatively high,
loyalty levels are declining. And thanks
to social media—the ultimate in word-of-
mouth communication—individual
switching decisions can have rapid and
widespread consequences.
Accenture’s most recent global
research exposes the scale of the
challenge. Despite a small overall
decline in switching levels, two in
three customers have changed provid-ers
in the past year in at least one of
the industries covered in the research
because of dissatisfaction with service
levels (see Figure 1). Consumers,
moreover, perceive few barriers to
switching in their constant quest for
differentiated offerings (see Figure 2).
Figure 1: Percentage of Customers Who Switched by Industry Due to Poor Customer Service
Retailers
Global
Emerging Markets
Mature Markets
26%
22%
19%
17%
16%
13%
10%
10%
9%
8%
4%
40%
33%
25%
24%
19%
20%
18%
15%
9%
12%
3%
18%
15%
15%
13%
14%
9%
6%
6%
9%
6%
5%
Banks
Internet Service Providers
Wireless/Cell Phone Companies
Home Telephone Service Providers
Cable/Satellite Television Service Providers
Life Insurance Providers
Hotels
Utility Companies
Airlines
Another Type
Source: Accenture 2010 Global Consumer Research

4. Figure 2: Perception of Providers Offerings and Shopping Behavior
Travel and Tourism 44% 11% 61% 8% 12% 53%
Life Insurance Providers 33% 18% 28% 28% 33% 26%
Consumer Goods Retailers 40% 13% 63% 7% 11% 51%
Consumer Electronics Manufacturer 39% 11% 55% 8% 11% 50%
Retail Banking Providers 33% 20% 32% 28% 34% 27%
Internet Service Providers 34% 15% 27% 27% 28% 29%
Cable/Satellite Service Providers 33% 19% 28% 29% 33% 26%
Landline Phone Service Providers 35% 17% 27% 30% 34% 22%
Wireless Phone Service Providers 34% 20% 37% 26% 30% 31%
Gas and Electric Utility Providers 27% 30% 25% 42% 47% 20%
Global Average 35% 18% 38% 24% 28% 33%
Page 3
Companies are the
same in terms of
offerings and services
Disagree Agree
It’s too much of a hassle
to switch providers
Disagree Agree
I consider shopping
around for better deals
Disagree Agree
Switching varies by industry, but
customer churn is plainly a universal
problem—a cause for concern since
the cost of acquisition is always
significantly higher than the cost of
retention. Indeed, our research find-ings
suggest that most companies
with large and diverse customer or
subscriber bases are struggling to
retain customers. Yet few understand
exactly why customers leave them—
and fewer still know what to do
about it.
• Many organizations lack the tools
to identify the drivers of churn.
The ability to correlate churn to
actionable customer segments, for
example, is critical to retaining
customers by proactively addressing
their needs.
• Few organizations are masters of
retention marketing. The ability
to deploy highly targeted offers
in-market across multiple channels
at speed; to learn which offers work
most effectively, and scale them; and
to take full advantage of customer-initiated
contacts in order to make
highly-targeted retention offers.
• Loyalty programs are often
inconsistently executed; and incen-tives
for front-line employees are
frequently misaligned with overall
retention goals.
• Many companies lack cohesion across
their customer interaction channels—
Web, call centers, retail stores—or fail
to implement incentives for front-line
employees that are aligned with
overall retention goals.
The upshot: Unhappy customers who
too often suffer the consequences of
organizational processes optimized
to deliver operational efficiencies,
instead of positive customer experi-ences—
poorly executed product or
service launches, erratic or conflict-ing
experiences across multiple chan-nels,
and inadequately trained and
equipped employees.
Source: Accenture 2010 Global Consumer Research

5. Page 4
The Solution
A few companies are winning the
battle for customer share. The
secret of their success: Combining a
top-down, enterprise-wide retention
strategy with sophisticated analytics
that enable them to “micro-segment”
their customers.
Leading players have established a
company-wide culture of accountabili-ty
for churn management across chan-nels
and organizational siloes, with
the core tools to support integrated
execution. As a result they have been
able to reduce customer attrition,
improve customer loyalty, and increase
both revenues and profitability.
Accomplishing this goal requires
significant and simultaneous changes
in many areas of the organization, as
well as a committed leadership team.
But even relatively small improve-ments
in churn can pack a punch on
the bottom line.
Consider, for example, the case of one
North American telecommunications
provider, which boosted incremental
margin by $1 million a month as a result
of a 10 basis point improvement (e.g.
moving from 0.5 percent to 0.4 percent)
in its customer churn rate (see Success
stories sidebar for other examples).
Guiding Principles of Successful
Churn Management
In many markets, growing the custom-er
base has been all about the acquisi-tion
of new customers and retention
marketing has typically come a distant
second in terms of senior management
attention and resource allocation.
To reverse this legacy mind-set and
manage customer attrition effectively,
organizations need to adhere to three
fundamental principles:
1. Ensure the support of senior
leaders, and a strong governance
structure. Accountability requires
the ownership of fully engaged
stakeholders with the confidence and
authority to challenge organizational
bottlenecks and take pro-active steps
to remove them. Success also requires
cultural change and commitment to
a permanent business model that
that may challenge the organization’s
beliefs about who owns customer
relationships.
2. Recognize that not all customers
are the same. Customer value and
profitability are key elements of the
company’s retention tactics.
3. Build a new set of capabilities.
Acquire a detailed, fact-based under-standing
of customers’ intentions and
what makes them switch; get offers
to market swiftly, using a rapid “test,
learn, and scale” mode; deploy real-time
treatment tools across customer
interaction channels that will ensure
the right retention decisions by
weighing customer churn propensities
against customer value.
Organizations with the commitment
to adopt these principles can focus
on building an appropriate operating
model to manage churn.

6. Page 5
Figure 3: Churn Management Operating Model
Churn Command Center
Program Management
Multi-segment Decisioning
Customer Insight & Analytics
Multi-dimensional Analytics-
(Customer, Behavior, Value)
Retention Marketing
Closed Loop Feedback
Closed Loop Feedback
Channels
Retention Interactions
Assisted
Self Service,
Face-to-face
Channels
SMS, Mail,
E-mail
Customer Lifecycle Interactions
Assisted, Self Service,
Face-to-face Channels
The Operating Model
It’s essential that any operating model
take an end-to-end approach to churn
management—from overall program
management, through analytics and
retention marketing, to the manage-ment
of channels (see Figure 3).
Copyright © 2011, Accenture LLP, All rights reserved.

7. Page 6
The Churn Command Center:
An Integrated, Cross-Functional
Approach
The Churn Command Center is the
nerve center of a successful churn
management program. Spanning
organizational boundaries and central-izing
churn improvement decisions,
it streamlines the end-to-end churn
reduction process—across analytics,
marketing, channels, IT and finance—
and drives swift and timely course
corrections based on a closed-loop
feedback around the effectiveness of
existing treatments.
Thanks to its cross-functional
structure, the Command Center
eliminates the inefficiencies caused
by organizational bottlenecks, thereby
significantly accelerating the time-to-
market of retention treatments.
It is also responsible for driving any
necessary cultural changes, including
the introduction of new performance
metrics and incentives. And because
its decisions affect the enterprise as
a whole, it’s vital that the company’s
senior leaders are involved in setting
the direction and governance of
the churn management program it
coordinates.
Customer Insight and Analytics:
Understanding Why Customers
Churn
Retention strategies based on cus-tomer
value and profitability are criti-cal
to success—hence the importance
of analytics.
By leveraging a diversity of data—
demographic and behavioral (products,
usage, interaction), as well as
value-related—retention analytics can
predict just when and why customers
are likely to churn. They determine
the customers' value to the company
in terms of both current and future
revenue and profitability, as well as
their influence on other customers.
They also infer the drivers of churn
by using multi-dimensional analysis
in novel ways. Correlating churn with
the interactions a customer has had
with the company can trigger reten-tion
treatments, as well as identifying
areas where the customer experience
needs to be improved. This may sound
straightforward, but it requires the
ability to build a service interaction
history across all interaction chan-nels—
retail, contact centers, Web
and Integrated Voice Response (IVR)
systems (see CAR sidebar).
Once a churn “hot spot” has been
identified, and its churn drivers
inferred, the right retention treat-ments
can be developed and tested.
CAR—Driving Success
with the Right Data
How do you know what data
really matter to your business?
There are thousands of
customer attributes that one
could potentially collect, and
determining the most important
is not straightforward.
Accenture tackles the challenge
by constructing a comprehensive
view of the customer and the
interactions with the customer
and the company across
all channels.
Our patented Customer Analytic
Record (CAR)1 database includes
thousands of variables and
uses proprietary methods built
over years of experience to
pinpoint those variables that
will be useful in a particular
situation. The CAR provides a
single view of the customer for
use in analytics and modeling.
It also provides a framework for
standardizing and automating
analytic processes, as well as
reducing the effort involved in
scoring different segments.
Users can benefit from fast and
cheap experimentation to develop
customer-targeting models in just
a few hours. And because CAR
pinpoints the data that matter,
it significantly outperforms
traditional approaches to raising
sales campaign closure rates.

8. Success Stories
By taking the strategic,
systematic and holistic approach
to customer retention embodied
in the Churn Management
Operating Model companies
worldwide have been able to
reduce churn and boost revenues:
• A leading US wireless provider
was able to cut churn by
15 percent in six months,
retain more than one million
subscribers and generate
hundreds of millions of dollars
in incremental net OIBDA—all
thanks to analytics-driven
customer segmentation, and
the company’s commitment
to the creation of a cross-functional
Retention Marketing: Accelerating
Speed to Market, Cross Channel and
at Minimal Risk
An effective retention marketing
capability focuses on three key
outcomes:
Speed to market is critical to
maximizing the impact of analytics.
The competitive environment means
that many churn “hot spots” are often
short lived. And unless a company
can implement insights quickly, much
of the potential retention benefit
will be lost. Companies can shorten
their offer development cycle, and
minimize the handoffs and bottlenecks
that cause delays, by employing a
cross-functional team of resources
in analytics, marketing, finance and
channel support. In our experience,
such a cross-functional approach
can cut cycle times by as much as 50
percent to 70 percent.
Page 7
Churn Command
Center dedicated to driving
customer lifetime profitability.
• A major European wireless
operator reduced churn by
53 percent—thanks to a
micro-segmentation strategy
that revealed the distinct
characteristics of high-risk
customer segments and
thus enabled a targeted and
differentiated marketing
campaign.
• An Asian telecommunications
company with multiple
customer segments reduced
churn by between 10 percent
and 30 percent—thanks to deep
analytic insights into both
customer behavior and average
revenue per user.
• A French telecommunications
operator leveraged churn
analytics and churn prediction
models to develop both
inbound and outbound
marketing campaigns—and as
a result realized a 250 percent
increase in campaign response
and a 23 percent improvement
in customer lifetime value.
Maximizing campaign return while
minimizing risk depends on a rigor-ous,
test-and-control approach. Many
companies launching retention cam-paigns
evaluate their effectiveness via
traditional marketing metrics (the take
rate, for example) without comparing
the treated customers to a control
group—an approach that can end up
boosting churn and/or costs because it
treats customers with no intention of
leaving. Campaign analytics, by con-trast,
tell companies just what their
churn rates really are. They evaluate
test offer effectiveness in terms of
such indicators as size of treated
population and contract renewal rates
across multiple dimensions—channel,
customer segment and offer vari-ant—
and then use the information to
inform scale decisions and select the
treatments to be continued. Our expe-rience
suggests that companies should
expect 10 percent to 20 percent of
treatments not to be scaled; indeed,
a lower proportion indicates that the
marketing team is taking enough risk
in finding innovative offers and treat-ments.
Campaign analytics should also
evaluate the performance of retention
programs throughout their lifecycle,
combining this data with information
around incremental revenue and costs
to come up with a true campaign ROI.
Operational reporting of key
metrics. Churn is a lagging metric
that may take six to twelve months
to show improvement, depending
upon the timing of treatment in the
customer lifecycle. It’s important
during the test-and-control phase to
closely monitor such leading indicators
of campaign effectiveness as list pen-etration
and offer-take-up rates. There
are several ways to monitor success or
failure—but in our experience, opera-tional
level reporting should occur
at least weekly to identify execution
issues quickly and allow mid-pilot
campaign adjustments. This approach
will accelerate the scaling of treat-ments
that work, and rapidly eliminate
those that are underperforming.

9. Page 8
Channels: Delivering the Right
Experience to the Right Customer
For better customer retention, orga-nizations
must improve two types of
customer interaction:
Retention interactions can be either
proactive or reactive, but in both
cases reducing churn hinges on:
Expanding the number of self-service
interaction channels in which reten-tion
offers can be made (e.g. Web,
social media); aligning employee
incentives to company churn objec-tives;
improving the delivery of
channel-specific training material; and
ensuring consistent channel processes
and system capabilities. Companies
should also consider providing on-site
execution support to identify and
resolve issues early and swiftly. In
the short term, offers and treatments
under this new approach can be
managed manually. As the number
of marketing treatments expands to
cover smaller groups of customers,
however, campaign optimization and
real-time decision-making tools will
be needed in order to provide offers
that are effectively differentiated by
channel.
Customer lifecycle interactions can
be root causes of churn as well:
• Early life: When the customer is
“trying out” a recently purchased
product or service; a critical moment
in the customer’s decision making.
• Change of life events: Such as
marriage, divorce, a change of
profession or geographic location.
• Mature life: When a customer is
nearing the end of a contract, or of
the useful life of the product they
are using.
Organizations need the capability
to correlate churn to any of these
interactions across any channel (see
USAR sidebar). And once the interac-tions
that are root causes of churn
have been analyzed, they must devise
policies, processes, and tools that sup-port
the delivery of a better customer
experience.

10. Page 9
USAR—An Integrated
Approach to Customer
Interactions
The root causes of customer
churn can be hard to trace.
They may lie buried in negative
experiences associated with any
one of multiple interactions. In
order to improve and sustain
customer retention rates over
time, companies must improve
the customer experience of all
these interactions. But in an
enterprise where customers
may have millions of monthly
interactions, across a variety
of channels, how do you find
them all? And how can you
tell which interactions drive
churn—especially when customer
interaction data records are
usually contained in different
systems that do not communicate
with one another and are
collected in varying data formats?
Accenture approaches this
challenge by integrating customer
interactions across multiple
channels through an asset known
as the Unified Service Analytic
Record (USAR)2. USAR allows
business leaders to identify and
understand the needs of chronic
customers and repeat contacts;
identify cause/effect relationships
between the customer experience
and churn; identify and address
root-cause behaviors at the agent
level.

11. Page 10
Summary
Keeping customers can be challeng-ing—
but as markets mature, successful
retention strategies are becoming an
increasingly essential element of com-petitive
advantage for many different
industries. Accenture experience
shows, moreover, that such strategies
can be developed. They hinge, crucial-ly,
on really understanding what moti-vates
different customers to churn—a
capability dependent on sophisticated
analytics. They also require the sup-port
of senior leadership, strong gov-ernance
and the commitment to build
a whole new set of capabilities that
accelerate speed to market, maximize
campaign return while minimizing
risk and ensure the right experience
for the right customer. Equipped with
an end-to-end operating model that
optimizes customer interactions across
all channels, companies can ensure
delivery of a better experience for all
their customers.
References
1. Features of the Accenture CAR may
be covered by one or more pending or
issued patents worldwide.
2. Features of the Accenture USAR may
be covered by one or more pending or
issued patents worldwide.

12. Copyright © 2011 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company, with more than
223,000 people serving clients in
more than 120 countries. Combining
unparalleled experience, comprehen-sive
capabilities across all industries
and business functions, and extensive
research on the world’s most success-ful
companies, Accenture collaborates
with clients to help them become
high-performance businesses and
governments. The company generated
net revenues of US$21.6 billion for the
fiscal year ended August 31, 2010. Its
home page is www.accenture.com.
Contact us
For more information about how such
a Churn Management Operating Model
can help your company minimize
customer attrition and achieve high
performance, please contact:
Rob Honts
Global Lead, CRM Churn
Management Services
rob.w.honts@accenture.com
John Hanson
Partner, Accenture Strategy Practice
john.g.hanson@accenture.com
About Accenture CRM
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